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Why Net Domestic Product Should Replace Gross Domestic Product as a Measure of Economic Growth

Author

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  • Roland Spant

Abstract

In the third article, Roland Spant, a Swedish trade union economist, argues that Net Domestic Product (NDP) should replace GDP as a measure of economic growth for a number of purposes. The key difference between GDP and NDP is depreciation. With the shift in investment toward information technology assets with relatively short service lives, the share of depreciation in GDP has increased in most OECD countries and GDP growth now exceeds NDP growth. Spant points out that this means that the use of GDP leads to the overestimation of real output growth as well as the potential for noninflationary real wage gains.

Suggested Citation

  • Roland Spant, 2003. "Why Net Domestic Product Should Replace Gross Domestic Product as a Measure of Economic Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 7, pages 39-43, Fall.
    • Handle: RePEc:sls:ipmsls:v:7:y:2003:3
    as

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    File URL: http://www.csls.ca/ipm/7/spant-e.pdf
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    File URL: http://www.csls.ca/ipm/7/spant-f.pdf
    File Function: version en francais, pp:46-51
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    References listed on IDEAS

    as
    1. Hulten, Charles R, 1992. " Accounting for the Wealth of Nations: The Net versus Gross Output Controversy and Its Ramifications," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 9-24, Supplemen.
    2. J. Steven Landefeld & Barbara M. Fraumeni, 2001. "Measuring the New Economy," BEA Papers 0011, Bureau of Economic Analysis.
    3. Ralph Kozlow, 2000. "International Accounts Data Needs: Plans, Progress, and Priorities," BEA Papers 0009, Bureau of Economic Analysis.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Dean Baker & David Rosnick, 2007. "India: Productivity and Sustainable Consumption in OECD Countries: 1980-2005," International Productivity Monitor, Centre for the Study of Living Standards, vol. 15, pages 41-54, Fall.
    2. Bert M. Balk, 2007. "Measuring Productivity Change without Neoclassical Assumptions: A Conceptual Analysis," CEPA Working Papers Series WP042007, School of Economics, University of Queensland, Australia.
    3. M. Mahamallik & P. Sahu & S. Mahapatra, 2014. "The Paradox of Fiscal Imbalances in India," Working Papers wp969, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. Schepelmann, Philipp & Goossens, Yanne & Makipaa, Arttu (ed.), 2009. "Towards sustainable development: Alternatives to GDP for measuring progress," Wuppertal Spezial, Wuppertal Institute for Climate, Environment and Energy, volume 42, number 42.
    5. Chris Ross & Alexander Murray, 2010. "Aggregate Measures of Income and Output in Canada and the United States: Implications for Productivity and Living Standards," International Productivity Monitor, Centre for the Study of Living Standards, vol. 19, pages 20-39, Spring.
    6. Bert M. Balk, 2010. "An Assumption‐Free Framework For Measuring Productivity Change," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages 224-256, June.
    7. David M. Williams, 2021. "Pay and Productivity in Canada: Growing Together, Only Slower than Ever," International Productivity Monitor, Centre for the Study of Living Standards, vol. 40, pages 3-26, Spring.
    8. Gore, Surabhi & Borde, Nilesh & Desai, Purva Hegde & George, Babu, 2022. "A Structured Literature Review of the Tourism Area Life Cycle Concept," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 10(1), pages 1-20.
    9. Jeremy Smith, 2004. "Aggregate Labour Productivity Growth in Canada and the United States: Definitions, Trends and Measurement Issues," CSLS Research Reports 2004-04, Centre for the Study of Living Standards.

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    More about this item

    Keywords

    Net Domestic Product; Alternative Growth Measurement; GDP; Depreciation; Capital Consumption; Service Life; Sustainable Growth; ICT; Information; Communication; Technology; Assets;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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